Linn Group Morning Corn Comment

CHICAGO - Jul 2/08 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market continued to move lower on Tuesday continuing the pressure
that was started on Monday with the bearish USDA report that showed signs of
declining demand and higher planted acres.  The September and December
contracts closed 5-6 lower, but well off the lows of the day which was 20
lower.  The corn market was helped by higher soybean and wheat prices as
well as crude which was up over $3.00 at one point during the trading
session.  The USDA report released on Monday was highly anticipated and now
that it is over, the market will begin to concentrate on yield potential and
analysts will try and get a better idea of the acreage estimate.  The USDA
will be conducting further interviews of farmers during the second half of
July for the August crop report.  The current weather forecast is considered
bearish as there isn't any hot/dry weather on the horizon and corn will
probably need a weather story to get up and going again.  Traders said the
improvement in crop conditions as reported on Monday after the close had a
mixed affect as the improvement was looked at as positive, but it is still
way behind past years.  Expanded limits to 45 cents yesterday are back to 30
cents today.  Volume was good at over 300,000 contracts and funds sold 5,000
contracts.  The market seemed quiet yesterday and I wouldn't be surprised
that we will start to see traders taking the rest of the week off for the
holiday.

Overnight, corn continued to move higher for most of the trading session
until really the last hour or so.  Corn was up 4-6 cents most of the night
session before selling off almost 9-10 cents the last hour.  No new news out
on the corn market right now so the market will probably continue to be
choppy as traders watch the weather forecasts.  New forecasts come out
around 4:30am and that could be the reason for the last session break as
some forecast are talking looking at the possibility of better growing
conditions as the temps get a little warmer with scattered showers, but as
we all know, these long term forecasts are likely to change.  The corn
market is under pressure after the USDA report showed a bigger acre number
and a bigger stocks number as the market concentrates on the weather
forecast to look for further direction.  The current forecast is conducive
for crop development, but that can change very quickly as the corn crop
isn't out of the woods yet and still needs almost perfect weather conditions
to make a decent yield.  Corn should find sellers on rally's and it will
probably find buyers on deeper breaks as the market probably stays in a
trading range.  The corn market should open a little lower today and I would
expect a quiet day unless the corn gets down into the lows from yesterday
and doesn't find any buying.  Soybeans could be an outside factor as the
rally in soybeans yesterday helped bring corn off the low.  Watch out for
corn to the downside as corn rallied over $1.50 the month of June and we
could have a deeper break this month.

Globex Overnight

Contract            Last      Net Change       High      Low      Volume

ZCN8                716^0    -3^4                  727^6    716^0    278

ZCU8                729^0    -3^2                  740^6    728^6    3149

ZCZ8                 749^2    -2^6                  761^0    748^4    6739

ZCH9                766^6    -2^0                  776^0    766^6    121

ZCK9                787^0    10^2                  787^0    779^0    239

Early Opening Calls: 2-3c lower

Top News

-- Argentine Congress comes to compromise on sliding grain/oilseed tax
schedule. Taxes will remain, however, farmers that only produce more than
750 mt of oilseed will be impacted. The members of congress will vote the
issue later this week. A member of the ruling party notes this compromise
will exempt roughly 80% of the farmers from the tax, however farm group
officials say this probably won't satisfy their members.

-- China's futures industry group reports combined volume on the 3 major
futures exchanges totaled 577 mln contracts in the Jan-Jun period, more than
doubling the volume in the same period a year ago.  Notional value of
contracts touched $5.1 Trillion

-- 100,000 mt of Ukraine Barley were purchased by Jordan on Wednesday for
delivery in Aug/Sept.  Traders report they bought it at $344.90/mt cif

-- 2008 Indonesian Corn production is expected at 14.85 mln mt up 1.56 mln
mt from the prior year's 13.29 mln mt, acc. to gov't stats bureau.

-- S Africa grain stats office said the country exported 10,713 mt YELLOW
corn in the latest reporting period

-- S Africa grain stats office said the country exported 16,244 White corn
in the latest reporting period

-- Pending Tender: 16,000 mt of Corn sought in July 3rd tender by group of
Israeli buyers, acc. to traders

-- Pending Tender: 28,000 mt of Corn products & Soymeal sought in July 3rd
tender by group of Israeli buyers, acc. to traders

-- Jan Dalian Corn futures on Wednesday were unchanged at 1,929 yuan/mt.
Other contracts were unch to 3 yuan higher

-- eCBOT Corn Vol. 263,815 ; Pit Vol. 45,466 ; Open Interest change: - 4,221

-- Weather: 6-10 Day Forecast: Normal Temps. Normal to Above Precip. The
Corn Belt will see scattered showers and thunderstorms today into late
Friday. Saturday and Sunday look dry. Temps normal to below.

-- Outside markets: Energy complex +0.22 at $141.19; Gold & Silver: -7.2 at
$937.8 and -0.127 at 18.164 ; US $ trading down vs. Euro and better vs. Yen

Cash Markets

-- CIF Corn steady off 2 . July +25U to +27U, Aug. +32 to +34, Sept. +36 to
+40,Oct. +32 to +36, Nov. +33 to +36, Dec. +35 to +39, Jan. +30 to +37

TREND:

Corn had a strong close with the rally back closing the market near the
highs of the day. Will be interesting to see if the lows today set the low
for this correction. The rebound today is important but if the lows come
out, it could still spell a deeper break.

The wheat market has all the ear marks of too many shorts. Yet cash is
showing harvest pressure and this market should not be able to stem much of
a rally unless triggered by very strong corn or beans. Gee is that what is
going on here?

The potential of an opening of the CRP this fall should keep pressure on the
July 09 contracts as well.



If you have any questions or want to discuss specific trade recommendations,
contact me directly.

Jim Riley
Linn Group
877-787-6278
jriley@linngroup.com
www.linngroup.com/

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